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Over the coming decades, one of the most populous generations in history will come of age. Those born between 1980 and 2000 will reach their prime years in employment and earnings, precipitating a windfall of spending and investment. This intergenerational transfer of wealth is expected to profoundly reshape the economy and, thus, is likely to present law firms with new challenges as a cohort of investors with new priorities and behaviours enters the market. Understanding what this change might look like is key to law firms serving their client’s wants and needs.

The Economist has termed this cohort ‘Generation SRI’ for having an affinity for what is called ‘socially responsible investment’. Indeed, a 2017 study by Morgan Stanley found that 86% of Millennials are interested in investments that not only generate returns but have positive social or environmental impacts. With greater investment in ESG (environment, social and governance investment), law firms may well see an acceleration of existing activity around socially conscious business. Firms will need to sustain education in ESG investment if they are to stay apace with their new clients. Due diligence and supply-chain risk are likely to be placed under a heavier spotlight.

This wealth windfall is also expected to create profound changes in consumption patterns. As Goldman Sachs have pointed out, this generation shows a remarkable resistance to ownership of goods such as cars. This attitude has given rise to the sharing economy. New clients in this sector have unique business models, especially those that are smaller, less market-driven, and collaborative initiatives. Firms will need to understand, and adapt to, these new models. Larger entities, meanwhile, bring with them new regulatory challenges to employment law, typified by Uber’s endless battle with regulators.

Perhaps most obviously, however, this generation are ‘digital natives’. Unlike their parents, Millennials have grown up with digital technology. Traditionally, the financial services industry has been slow to adapt to changing technology but the advent of banks such as Monzo reflect how consumers are demanding ever-greater flexibility. Whilst advances in legaltech have been transformative, it still lags relative to other disruptive technologies, fintech especially. Accelerated technological development becomes more of an imperative when servicing younger, more tech-savvy clients.

This nexus between technology, Millennials and investment was placed under a spotlight over lockdown. Digital investment platforms such as Robinhood have significantly lowered the barriers to entry for Millennials, who are now able to invest directly in firms using just their smartphones. This is an important development: technology has enabled Millennials to exercise far greater control over their assets than their parents. Crucially, this means law firms will increasingly be dealing with younger clients.

Growth of these platforms will also shape an already-emerging pattern of heightened M&A activity amongst banks and digital payments services. Goldman Sachs’ acquisition of United Capital in 2019 is one such example.

Law firms must be alive to the opportunities, and potential challenges, that the coming windfall of wealth could pose. As I have highlighted, with a new demography of clients, comes new priorities and trends in economic markets. It is the job of a law firm to conduct due diligence on a company and summarise its findings for investors. To provide an informed assessment in light of new market conditions, and new investors, will require law firms to accelerate education in ESG and technology.

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